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Weighed down by review overload

In The Magnificent Seven, Steve McQueen is asked why another character has run through a cactus field naked. “It seemed like a good idea at the time,” he replies.

If you ask regulators, Governments and thinktanks why they set up inquiries into various aspects of public policy – especially some time after the event – they might give the same response.

The effort which goes into some inquiries can be disproportionate to the outcome. The time which elapses between commissioning a review and implementing its conclusions can reduce potential benefits.

But there is another factor which should give pause for thought before any inquiry is set up. The inevitable consequence of the format of an inquiry is that it takes a snapshot of a situation at a given moment and suggests how matters can be improved.

In an area where market dynamics are already acting as a far more significant force for change, then a review risks providing the answers to last year&#39s questions.

This issue is especially relevant to IFAs because we are suffering from a surfeit of reviews. To the long-expected second phase of the polarisation review, we can add the review of personal finance instigated by the Myners Report on institutional investment, the FSA review of with-profits and the Treasury paper on Catmarks.

Then there is the regular diet of consultation papers from the FSA, to which we must regrettably add the latest PIA document on the pension review and the corrective work on the flaw in regulatory guidance concerning Serps.

Each of these exercises may seem laudable in itself and each will undoubtedly be conducted with diligence and objectivity. But, in the absence of any overview and of anyone responsible for putting together the pieces of a jigsaw, the outcome may be a series of uncoordinated and haphazard initiatives which collectively add little to the market but which cost businesses (and hence investors) money and time to implement and often frustrate rather than facilitate market developments.

Unfortunately, we are where we are and no amount of irritation will change that. How can the worst risks of this review overload be avoided?

First, by maximum transparency in their conduct. This will expose to the market areas where self-defeating or contradictory courses are being pursued and allow time for them to be revised before proposals are set in concrete. We must not have recommendations appearing out of thin air at a time when the political consequences of their rejection may be too great.

Aifa has asked for open consultation on the terms of reference for the “Son of Myners” review.

Second, there needs to be an acceptance from the authorities that incremental rather than one-off revolutionary change can often be the most effective way to proceed.

Third, there needs to be some form of self-denying ordinance through which those fond of instigating reviews coordinate their initiatives so that the introduction of new reviews is done in a coherent, joined-up way.

We deserve nothing less.


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